Public sector leaders back calls for pay transparency

The Local Government Association (LGA) has insisted that the pay of council chief executives is already open to public scrutiny after a report from the Audit Commission called for more transparency in severance packages.

The Audit Commission report, By Mutual Agreement, looked at council chief executives’ job moves over 33 months, and found that agreed severance packages for 37 council chief executives totalled £9.5m – an average of £260,000 each. Six of the 37 subsequently moved to a similar job in a different region within a year.

The report showed that the average cost to councils of each severance package was almost double the annual basic salary – and, in four cases, more than triple.

The watchdog suggested not all such deals are justified, that competent chief executives have sometimes lost their jobs needlessly, and that less-effective individuals have been paid-off rather than dismissed.

It called for severance deals to be more transparent, suggesting they are reviewed by scrutiny or remuneration committees, with details published shortly after they are agreed.

Jo Miller, deputy chief executive of the LGA, stressed that only a small number of chief executives receiving payments went on to take up other senior council jobs within a year, adding that chief executive pay is subject to public scrutiny.

“All council senior pay and severance packages are subject to scrutiny by external auditors,” she said. “Council leaders are very aware of the impact of decisions about senior staff as they are subject to the voters’ judgement through the ballot box.”

Gill Hibberd, HR director at Buckingham County Council and outgoing president of the Public Sector People Managers’ Association, also pointed out that the report only focused on a small number of cases, but welcomed the report’s recommendations as “sensible”.

“Recommending more transparency is sensible – it’s what the council taxpayers expect,” she said. “We are seeing more transparency anyway, with a number (of public bodies) publishing the pay packages of their top teams. I don’t see any difficulties in publishing severance packages.”

The controversy over severance packages of council leaders was highlighted in 2008, when Liverpool City Council awarded its outgoing finance chief a payout worth £500,000, just weeks after the Audit Commission said it was worst financially managed authority in England.

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